Two new biotech IPOs help set the stage for the fall parade

The crossover round is alive and well. Just a few days after Dermira put out the word that a consortium of backers had come up with a $51 million C round, the company rolled out a $75 million IPO. And the news, along with a fresh, $86 million filing from Rhythm Pharmaceuticals, helps set the stage for a new round of fall biotech IPOs that will once again test investors' appetite for risk.

First, let's look at Redwood City, CA-based Dermira. Focused on skin ailments, the biotech is partnered with UCB on the development of Cimzia--already on the market--for psoriasis, a field that will soon be packed with a host of contenders from the likes of Novartis ($NVS) and Eli Lilly ($LLY). The biotech has laid plans for a Phase III psoriasis trial in 2015 as it pursues further work on a new therapy for "hyperhidrosis," or excessive sweating, in the armpits. It's in a Phase IIb study and a successful outcome would set the stage for a late-stage program. There's also an acne treatment in early mid-stage studies.

Bay City Capital, New Enterprise Associates and Canaan VIII own the lion's share of the company, with smaller stakes for UCB and others. In its S-1 the biotech reports that it has accumulated $68 million in losses, not unexpected in a development-stage company.

Boston-based Rhythm meanwhile has racked up a $65 million deficit advancing a pair of drugs now in mid-stage development. Its lead therapy is relamorelin, a ghrelin agonist for a complication of diabetes known as diabetic gastroparesis. And there's a followup obesity program for a drug dubbed RM-493, which it says is aimed at obesity triggered by genetic deficiencies in the MC4 pathway.

Pfizer ($PFE) backed the company with an $8 million investment in late 2012 and still owns 10% of the company. The majority of the company, though, is controlled by New Enterprise Associates, Third Rock and MPM.

These new filings signify that the summer lull on IPOs is coming to an end as analysts check the health of the now long-running IPO market for biotechs, which started opening up about two years ago now. In recent months there's been a clear break between the experiences of high-profile private biotechs entering the market and some of the low-profile offerings. Weak offerings are getting pulled or coming out with a hair cut, while investors have still been willing to buy into some of the better IPOs. 

Now Rhythm and Dermia can test the market to see where they fall in the mix.

- here's the S-1 on Rhythm
- here's the S-1 on Dermira

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